Apple & Pear Export Opportunities and Global

APPLE & PEAR EXPORT OPPORTUNITIES AND GLOBAL MARKET POSITION

Prepared by Wayne Prowse Fresh Intelligence Consulting July 2019

Population = Consumers = Demand 88% live in Northern Hemisphere and 82% live in Eastern Hemisphere (Eurasia) 50% live within 5 hours flying time from Hong Kong - only 3% live south of Tropic of Capricorn

44% 50%

18% 53% 82%

Source: Datagraver.com; Fresh Intelligence analysis

GDP per capita = Purchasing Power North of tropics - North America and Europe most lucrative, China (East Coast) is the fastest developing

Source: Centre for Global Development; Fresh Intelligence analysis Modern Asian consumers are seeking fresh produce at any time. • This means that : • Retailers need to source products globally if not available within Asia • Retailers are modernizing routes to market • Retailers know that high quality fresh produce drives traffic into store End point retail is changing from traditional wet markets to modern cashless online hybrid Global Fresh Produce – key facts

• 2.55 billion tonnes produced in 2017 • Fruit 865.4 million tonnes • Vegetables 1.69 billion tonnes

• 137 million tonnes traded in 2018 5% • Fruit 83 million tonnes 10% • Vegetables 54 million tonnes 3%

Source: FAOSTAT 2017, ITC Trademap; Fresh Intelligence analysis Southern vs Northern Hemisphere share of trade SH ~ 9% of global F&V exports

Southern Southern • 137m tonnes of fruit and Hemisphere Veg Hemisphere Fruit 1% 8% vegetables traded in 2018

• 61% is fruit and 39% Northern Hemisphere Veg vegetables 38% • Southern Hemisphere accounts for 15% of all fruit and 3.5% of all vegetables Northern Hemisphere Fruit exported 53%

• Greater propensity for fruit to be exported to northern hemisphere

NH ~ 91% of global F&V exports Global Trade in Fresh Fruit reached 83 million tonnes from 44 million tonnes in 2002 to 83 million tonnes in 2018 +3.5% per year over 10 years

90.00

80.00 + 3.5% per year

Other 70.00 Rasberries & Blackberries

Papaya

Blueberries

60.00 Durians Cherries

Strawberries

Grapefruit

50.00 Kiwifruit

Mangoes

Caneloupe melons

Million Tonnes Avocados 40.00 Dragon Fruit, Longans and tropical

Pears

Peaches Nectarines & Plums

Lemons & Limes 30.00 Watermelons

Pineapples

Grapes

Mandarins 20.00 Oranges

Apples

Bananas

10.00

- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: ITC Trademap; Fresh Intelligence analysis Apples are the world’s 3rd most traded fruit

• Almost 8 million tonnes of apples and 2.7 million tonnes of pears traded • Bananas account for 30 per cent of global fruit traded • Cherries have a high growth rate

Mill Tonnes share 1 yr change 5 yr trend 10 yr trend Bananas 25.28 30% 8.3% 4.6% 3.8% Citrus 16.98 20% 4.8% 3.9% 2.7% Apples 7.96 10% -10.2% -1.4% 1.1% Grapes 4.74 6% 3.3% 3.9% 2.6% Pineapples 3.93 5% 14.0% 5.0% 5.1% Summerfruit 3.03 4% -10.0% 1.6% 2.9% Dragon Fruit, Longans etc. 2.70 3% -13.5% 3.1% 4.2% Pears 2.68 3% -2.9% -0.4% 1.8% Avocados 2.48 3% 16.0% 12.3% 12.2% Cherries 0.78 1% 30.3% 11.4% 9.8% Others 13.04 16%

Total 83.59 100% 4.3% 3.9% 3.5% Source: ITC Trademap; Fresh Intelligence analysis Tropical Fresh Fruit Production & Distribution Large volumes of Fruit moves from producers in tropics to lucrative northern markets

Tropical Fruit (year round)

Source: Centre for Global Development, FAOSTAT, ITC Trademap; Fresh Intelligence analysis Temperate Fresh Fruit Production & Distribution Main movements are intra-regional, supplemented by counter-seasonal from the south

Temperate Fruit (northern season)

Tropical Fruit (year round)

Temperate Fruit (southern season)

Markets that want year round temperate fruit must import counter-season fruit. Influencers of Australian Fresh Fruit Export Growth Exchange Rates, drought, GFC, domestic market prices, FTA’s, market access, competitors, DEMAND

Australian Fresh Fruit Exports by Market Tonnes 2001 - 2018

500000

ALL OTHER 450000 USD > $1 EUROPE 400000 Canada USD < 50c United States 350000 MIDDLE EAST GFC New Zealand 300000 South Korea 250000 India Taiwan 200000

Tonnes per year Viet Nam Philippines 150000 Thailand 100000 Indonesia Japan 50000 China Malaysia 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Singapore Rise of Chile Hong Kong JAEPA Source: ABS 92017) via ITC Trademap; Fresh Intelligence analysis Tri State Millennium Drought Floods ChAFTA Australian Fresh Fruit Export Growth Led by citrus and grapes benefiting from counter-seasonal demand for high volume lines 450,615 tns Australian Fresh Fruit Exports by Product Tonnes 2001 - 2018 A$1.17 bn 500,000

450,000 USD > $1 Other 400,000 USD < 50c Banana 350,000 Kiwifruit

GFC Avocados 300,000 Berries

250,000 Apples Cherries

Tonnes per year 200,000 Mangoes

Pears 150,000 Summerfruit

100,000 Melons

Grapes 50,000 Citrus

- 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source : ITC Trademap; Fresh Intelligence analysis Rise of Chile JAEPA Tri State Millennium Drought Floods ChAFTA Influencers of Apple & Pear Exports China enters the WTO, drought, competitors, export culture

Apple & Pear Exports 2001 - 2018 60,000 3.00 China enters USD ~ 75c WTO USD > $1 50,000 2.50

USD < 50c

40,000 2.00

Pears 30,000 1.50 Apples AU $ per kg

Tonnes per year Apple $ per kg

20,000 1.00 Pear $ per kg GFC

10,000 0.50

0 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ITC Trademap; Fresh Intelligence analysis Rise of Chile JAEPA KAFTA Millennium Drought ChAFTA Apple & Pear Export Update – YTD May 2019

Apples Exports January to May 2019

Volume 1,861 tonnes -1% Value 3.58 M AUD 10% $ per kg $1.92 11% $0.19

Pears Exports January to May 2019

Volume 3,504 tonnes -39% Value 7.89 M AUD -14% $ per kg $2.25 41% $0.65 Apple & Pear Export Update – YTD May 2019

Apples Pears (44% of annual) (36% of annual)

Exports of Apples to leading markets Exports of Pears to leading markets January to May 2019 January to May 2019

Tonnes A$ per kg Change LY Share Tonnes A$ per kg Change LY Share Papua New Guinea 412 $2.12 7% 22.1% Canada 1,359 $3.23 -6% 38.8% Indonesia 217 $2.39 68% 11.7% Indonesia 613 $1.73 -47% 17.5% Hong Kong 204 $2.50 42% 10.9% Singapore 421 $1.62 -39% 12.0% New Caledonia 226 $1.33 -20% 6.4% Italy * 389 $1.00 0% 20.9% New Zealand 157 $1.62 -48% 4.5% China 152 $2.03 23% 8.2% Fiji 193 $1.25 3% 5.5% Sri Lanka 198 $1.50 -25% 10.6% Papua New Guinea 109 $1.83 3% 3.1% Singapore 39 $3.30 2% 2.1% Malaysia 61 $3.14 -86% 1.8% India 117 $1.36 -80% 3.3% India 81 $1.59 -40% 4.4% Hong Kong 57 $2.03 -49% 1.6% Canada 18 $4.57 124% 0.9% Qatar 10 $5.79 63% 0.6% Other 189 5.4% United Kingdom - Total 3,504 $2.25 -39% 100% Source: IHS Global Trade Atlas; Fresh Intelligence analysis Other 141 7.6% Total 1,861 $1.92 -1% 100% Source: IHS Global Trade Atlas; Fresh Intelligence analysis

*Eurostat data records price as A$2.24 Apple & Pear Export Update – YTD May 2019

• Apple Exports by State • (44% of annual)

January to May 2019 New South Western South Australia Tonnes A$ per kg Change LY Wales Australia 0.2% 0.8% 0.7% Victoria 1,404 $1.16 21% Tasmania Queensland 192 $2.08 -61% Queensland 11% Tasmania 207 $1.61 28% 11% New South Wales 15 $4.42 35% Western Australia 13 $1.59 -52% Northern Territory 6 $3.07 -8% South Australia 4 $3.68 1371% Victoria 76% Total 1,861 $1.35 -1% Source: IHS Global Trade Atlas; Fresh Intelligence analysis 18 The Apple Imports by Asia were 1.4 million tonnes in 2018 India, the leading market, banned imports from China in 2018 China provided 55 per cent of the region’s apples, followed by United States, New Zealand and Chile China also imported 64,000 tonnes of apples in 2018, of which just 129 tonnes from Australia

Apples Imported by Asian markets 1600000 2.00

1.80 1400000 Japan 1.60 1200000 Singapore 1.40 Malaysia 1000000 1.20 Philippines Thailand 800000 1.00 Taiwan A$ per kg CIF

Tonnes per year 0.80 Viet Nam 600000 Indonesia 0.60 400000 Hong Kong 0.40 China 200000 0.20 India A$ per kg 0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ITC Trademap; Fresh Intelligence analysis 19 Pear Imports in Asia have climbed to 530,000 tonnes 80 per cent supplied by China , 7.5 per cent from South Africa, 1.7 per cent from Australia Though mostly Asian Pears emerging interest in European pears - good news !!

Pear Imports by Asian markets 600000 1.80

1.60 Japan 500000 South Korea 1.40 China

400000 1.20 Taiwan

Singapore 1.00 300000 India 0.80 Philippines A $ per kg CIF Tonnes per year Malaysia 200000 0.60 Thailand 0.40 Viet Nam 100000 0.20 Hong Kong Indonesia 0 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 A$ per kg

Source: ITC Trademap; Fresh Intelligence analysis 20 China has been importing European pears from Europe and United States – albeit 8,000 tonnes Opportunities for counter season supply unable to be fulfilled from Argentina and New Zealand US supply curtailed by the tariffs Australia has a Market Access request in the DAWR pool.

Pear (European) Imports by China 9000 2.50

8000

2.00 7000

6000 New Zealand 1.50 5000 Argentina

United States 4000 1.00

Tonnes per Year Netherlands 3000 Belgium

2000 A$ per kg 0.50

1000

0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source : ITC Trademap; Fresh Intelligence analysis 21

Summerfruit Exports reached a record high in 2018/19 23,015 tonnes worth $89m

Australian Summerfruit Exports since 1996 25,000 4.5

20,000 3.5

15,000 Apricots 2.5 Peaches

2 Plums 10,000 Price per KG - AUD Nectarines

1.5 $ AUD per KG Export Volume per year - Tonnes

1 5,000

0.5

0 0 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 Period July - June

Source: ABS data via IHS Global Trade Atlas; Fresh Intelligence analysis 22

Victoria is the lead exporting state in 2018/19 exported 18,100 tonnes

Summerfruit Export comparison by state 2018/19 20,000

18,000

16,000

14,000

12,000

10,000 FY June 18

FY June 19 8,000

Export volume by state (Tonnes) 6,000

4,000

2,000

0 Victoria New South Wales South Australia Queensland Western Australia Tasmania all other

Source: ABS via IHS Global Trade Atlas, Fresh Intelligence analysis 23

Summerfruit Imports in Asia were 160,000 tonnes in 2018 Australia supplied around 11% or 17,000 tonnes

Summefruit Imports by Asian markets 2009 to 2018 180,000

160,000

140,000 South Korea

Philippines 120,000 Japan

Thailand 100,000 Indonesia

India 80,000 Malaysia

Singapore 60,000 Import Volume per year (Tonnes) Taiwan

Viet Nam 40,000 Hong Kong

China 20,000

- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source : ITC Trademap based on multiple country imports ; Fresh Intelligence analysis 2018/19 Cherry Exports exceeded 5,000 tonnes worth $79m Record high value exceeded 2015/16 value of $75m – although volume was higher

Australian Cherry Exports 10 years - volume and $ per KG 6,000 $20.00 USD ~ 75c $18.00

5,000 GFC USD > $1 $16.00

$14.00 4,000

$12.00

3,000 $10.00 Volume $ per KG - AUD $8.00 Value AUD Export Volume Tonnes 2,000 $6.00

$4.00 1,000

$2.00

- $- 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Rain Rain JAEPA ChAFTA Source : ABS Data , Fresh Intelligence Analysis Rain KAFTA China increased 136 per cent to 1,589 tonnes with the improved access for mainland suppliers

Australian Cherry Exports to major markets

12 mths to Feb 18 12 mths to Feb 19 Export Volume per season (tonnes) 673 China 1,589 1,190 Hong Kong 921 392 Vietnam 598 471 Singapore 582 260 Taiwan 313 185 Malaysia 218 126 Indonesia 139 126 Saudi Arabia 155 110 Thailand 63 88 United States 52 12 Canada 52 33 Japan 30 106 Korea, South 21 26

Victoria supplied 40 per cent of the Cherry Exports

Australian Cherry exports by state - 12 months to February 2019 South Australia Other Cherry exports by state 2% 0% 2,500 12 months to February 2019 vs previous year

2,000 New South Wales 20% Tasmania 38%

1,500 Volume KG 1,000 12 mths to Feb 18 12 mths to Feb 19

Victoria 500 40%

0 Tasmania Victoria New South Wales South Australia Source : Australian Bureau of Statistics , Fresh Intelligence analysis 27

Cherry Imports in Asia were 245,000 tonnes in 2018 Australia supplied around 2 per cent or 4,800 tonnes while Chile supplied 180,000 tonnes to China, driving growth

Asian import growth for Cherries from all sources 2008 to 300,000 2018

250,000

all other 200,000 India Malaysia Viet Nam 150,000 Singapore Thailand 100,000 Japan Taiwan South Korea 50,000 Hong Kong Import Volume per year from all sources - Tonnes peryear sources Tonnes fromall - Volume Import China

- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source : ITC Trademap; Fresh Intelligence analysis We are small players in the global market • The domestic market will remain our main market for apples & pears • Lack of scale to develop market share in North Asian markets • Distance, competition and scale inhibits trade to Europe • Market Access protocols is restricting some markets • ASEAN will drive demand • Indonesia for pears – co operate with South Africa – as there is ample scale for both • Hold market share in Singapore and Malaysia • While North Asia (China, Japan, Korea) have their own apples & pears there is emerging interest in European pears from China • Apple opportunities in ASEAN – must be competitive with New Zealand Thank You 30

REFERENCES

• International Trade Centre, TRADE MAP www.trademap.org/

DISCLAIMER

• Fresh Intelligence Consulting collated the data for Fruit Growers Victoria from data provided by the international trade databases as referenced. • While every effort is made to ensure that the data is a true reflection of the trade, some errors may occur due to the reporting and Fresh Intelligence Consulting takes no responsibility for any losses that may occur as a result of decisions based on this data. • Views expressed are personal and may not reflect the same views of Fruit Growers Victoria.

CONTACT

• Wayne Prowse • Principal and Senior Analyst • Fresh Intelligence Consulting • Ph: +61 (0)2 9440 2138 • M: +61 (0)408 164 966 • Email: [email protected]